BUY vs RENT

Pros & Cons of Home Ownership vs Renting

There are obvious benefits of owning a home such as pride of ownership, status symbol, creation of asset and wealth, privacy, and feeling of freedom to customize according to your own liking. However, buying a home is a massive financial decision involving lots of money and a long commitment to a lender. Therefore, large numbers of individuals and families continue to live on rent. Here are the pros and cons of both owning a home and renting.

pros & cons of renting

Pros of renting

You pay small amount of money up front and enjoy living in a home
You have no responsibilities towards upkeep and maintenance of the rented home
You can easily move out and rent another home. Relocation is easy when you get a better job in another city.

Cons of renting

Landlord can increase the rent every year
Moving from one place to another can be difficult and costly
You have less privacy and little freedom of personalizing the space

Pros & Cons of Buying a home

Pros of buying a home

Pride of ownership
Lots of privacy
Freedom to update and renovate according to requirements
No one can kick you out of your home
You’ll enjoy the equity even if you cannot pay mortgage under financial stress
Ownership is a form of forced saving which allows you to create wealth
You enjoy tax deductions when filing income tax returns
Your home grows in value over a period
You become rent-free after you have paid the mortgage

Cons of buying

Relocation becomes very difficult. You cannot move to a new place because of your commitment to the lender.
You need large amount of money to pay for down payment

While buying a home has many advantages, buying or continuing to live on rent is totally dependent upon your circumstances.

If you think you have settled in your life and earning enough to easily afford the EMIs to a lender, it is certainly prudent to try and buy a home for your family.

On the other hand, if you are young and still hoping for a better job and career, it is advisable to live in a rented place.

You can always think of buying when you have found a good paying job and started on your family.

benefits of home ownership

Buying a home can seem like a daunting task, particularly because it requires so much money upfront and you know that you will be paying for it for years to come. It is one of the biggest financial decisions you will make in your life, so it requires careful consideration, but there are also a lot of upsides to owning your own home. Some of these advantages include:

Privacy and autonomy over your home
A mortgage is more predictable and stable than rent if it is fixed rate
Many payments that you make towards your home are tax deductible
Pride of homeownership and sense of belonging in your community
Equity that goes to you as you make payments
More options, especially if you have a budget window.

There are definitely many different factors to consider if you are weighing buying versus renting. Homeownership requires you to have a stable or growing income, as you will be making payments for a very long time. While there are significant financial benefits, they are long term so having a budget or savings plan in place before you purchase your home is critical. Also, your credit will affect your ability to buy a home more than it will your ability to rent, so knowing what your credit score is and how to improve it is another thing to consider. Overall, there are many benefits to owning a home, especially if you think you will be in one place for awhile and you feel financially stable. Here is a breakdown of the benefits of owning a home vs. renting a home.